Inflation rises – and spreads

Australia’s inflation is not just at a 17 year high, now. It is broadening as well.

It is busting out all over.

As economist Alan Langford, of HBOSA, put it “pressure points” are now appearing in “more than a few isolated pockets.”

The Treasurer, Wayne Swan, acknowledged the same point, saying:”I think these inflation figures are a stark reminder of the price pressures hitting Australian families.”

One figure, alone, demonstrates that. The Statistician reported yesterday that the price of bread rose by no less than 9 per per cent, throughout Australia, over the past year.
The price of milk leapt by 11.6 per cent in the same time.

So where would the government have been, without the US credit crunch?

That appears to have stopped Australian shoppers in their tracks, a result that the Reserve Bank failed to achieve with 12 consecutive rate rises.

It’s dangerous to keep spending, when the value of your shares has fallen sharply, in a major global shakeout.

With oil prices now still at $US118 a barrel, inflation could remain high for some time.

That will, at least, prevent the Reserve Bank easing Australia’s interest rates, any time soon.

So what happens now?

We may have to wait until next month’s Federal budget, for the full answer to that question.

But Mr Swan, has confirmed, yet again, that inflation remains the government’s top target.